Gaming tycoon Stanley Ho Hung-sun’s sister-in-law and a former senior Hong Kong civil servant on trial for bribery had a private relationship while helping each other with official business, according to the man who introduced them.

Ho’s nephew Andrew Edward Tse was asked to describe the relationship between Wilson Fung Wing-yip, 55, former deputy secretary for economic development and labour, and his co-defendant Cheyenne Chan Ung-iok, 63, during the pair’s trial at the District Court on Thursday.

Fung is accused of hiding a HK$510,000 (US$65,000) deposit Chan paid on September 28, 2004 for his purchase of a flat at One Robinson Road in Mid-Levels. He is married to Betty Fung Ching Suk-yee, who heads the government’s Policy Innovation and Coordination Office.

Prosecutors alleged Fung deliberately concealed an obvious conflict of interest by not declaring his relationship with Chan to the government.

Fung has denied accepting an advantage and misconduct in public office, while Chan pleaded not guilty to offering an advantage to a public servant.

Tse, then chief executive of Helicopters Hong Kong, said he introduced Chan and his colleagues to Fung at the Mandarin Oriental hotel in Central after the official became head of the government’s aviation division on April 14, 2003.

The trio later played tennis on three occasions and had dinner together afterwards but Tse was not sure if business was discussed.

Tse said company co-director Chan had been experiencing marital difficulties and wanted to devote more time to the business so she took on extra responsibilities including commercial activities and operations on top of accounts.

By the end of 2004, Tse said Chan took full control of the helicopters business while he focused on developing flights. The company was renamed HK Express the same year.

Fung’s bureau approved the company’s air traffic rights to Shenzhen and Guangzhou in December 2004, then Hangzhou, Nanjing, Ningbo and Chongqing in May 2005.

Tse said he followed Chan’s instructions to write a thank-you letter, dated May 11, 2005, to the government.

“I recall she said that Fung suggested I write a letter because he fought for those air traffic rights,” Tse testified. “My understanding at the time was that maybe Mr Fung hoped to improve his superior’s impression of him.”

“Ms Chan and Mr Fung had a private relationship,” Tse replied after a short pause. “They would have lunch and play tennis.”

Meanwhile, Tse said his relationship with Chan had taken a turn for the worse because she wanted to be an equal partner and prove “she was not under [his] shadow”.

Tse told the court he also found Fung had become a changed man as reflected in a meeting on December 22, 2005 during which Fung allegedly criticised him for not fully utilising the Hangzhou route and said his “business partner”, meaning Chan, was worried about him.

“He rarely talked to me like that,” Tse said.

But Joseph Tse Wah-yuen SC, for Fung, countered that there was no such meeting.

Once she admitted that she had passed on the letter to Ho, I knew she was using it to dish the dirt and jockey for position

Witness Andrew Tse, on Cheyenne Chan

Andrew Tse further testified to feeling puzzled when an irate Ho called on December 31, 2005 to say he had angered the government and scold him for doing a poor job in operating flights.

“Leave the helicopters to [Chan],” Tse recalled Ho as saying.

Tse said he later learned that Fung had given Chan a letter indicating the government would withdraw the company’s rights to Shenzhen.

“Once she admitted that she had passed on the letter to Ho, I knew she was using it to dish the dirt and jockey for position,” Tse said.

Former assistant secretary for economic development and labour Sara Tse Yee-man, who drafted the letter, said there was nothing inappropriate about the government issuing the document but observed that some of the wording had deviated from standard lines.

The letter read: “We are therefore disappointed to see that the traffic rights obtained in a hard-fought battle have all along remained idle. You also did not have the courtesy to informally notify the government of any of your plans in respect of your requested Shenzhen service.”

She recalled that it was Fung who amended the letter but said she could not be entirely sure.

However, Fung’s defence counsel observed from an email that other officials had similarly penned strongly worded complaints when dealing with air traffic rights.

The trial continues on Friday before district judge Douglas Yau Tak-hong.